Buying Real Estate Notes: The Ultimate Investment Cash Flow. Profiting from America's Biggest Note Opportunities. http://noteschool.com http://facebook.com/noteschool

1. Profiting from America’s biggest Note Opportunities
BUYING REAL ESTATE NOTES
The Ultimate Investment Cash Flow

2. Death of REO’s

3. 3 Core Things
• Unprecedented
Market Conditions
• Understanding The
Discount Note Industry
• Outsourcing the work!

4. STOCK MARKETYOUR MONEY
(ANXIOUS MONEY)
Where is it
going?
X
Market Crash 2008

5. Source: NAR National Address
2013

7. 5 Years
Only 4½
Million Sold
2008 2013

8. Sources: Reuters and ZeroHedge, Bloomberg 2013
Where is all the Inventory?
Blackstone 45,000 SFH
Carrington 25,000 SFH
Colony America 9,931 SFH
Silver 5,000 SFH
Tricon Capital 4,000 SFH CA, FL, AZ
3,600 SFH AZ, house in last 5 yearsIL, CA,
IN, NC, GA, FL
PLUS Billions more raised to
buy SFH foreclosures and REO’s

10. Who Are We?
© Copyright CFG, LLC 2014. All Rights Reserved.

11. © Copyright CFG, LLC 2014. All Rights Reserved.

12. What’s a Note?
1,000
Eddie Speed
P.O. Box 1234
South Lake, TX

13. John Eddie signs
a note for
$1,000
John Doe 1,000John
receives
$850
Check
Cashing biz
receives

14. Buyer
Ownership
Deed
Seller
Mortgage
NOTE
Mortgage Lender

15. WHY NOTES?
The Surge of Growth Ahead!

16. STOCK MARKET
X
Mortgage Lender
Colonial
Market Crash 2008

17. With relatively little fanfare, the stock market has become expensive again.
While the rest of economy has been growing frustratingly slowly for almost
five years, stocks have been rising at a boomlike clip. An investment in the
Standard & Poor 500-stock index would have doubled from early 2009
through early 2013 and then gained an additional 18 percent over the last
year.
Relative to long-term corporate earnings – and more in a minute on why
that measure is important – stocks have been more expensive only three
times over the past century than they are today, according to data from
Robert Shiller, a Nobel laureate in economics. Those other three periods are
not exactly reassuring, either: the 1920s, the late 1990s and in the prelude
to the 2007 financial crisis.
Wall Street, of course, can always come up with justifications for high stock
prices. Remember: The Internet changes everything. Or: The business cycle
has been repealed. Some of the current justifications even have a ring of
reality to them.
Time to Worry About Stock Market Bubbles
MAY 6, 2014
Nobel Laureate in Economics: Stocks have
been more expensive only three time in the
last century: the 1920’s, the late 1990’s and in
the prelude to the 2007 financial crisis

18. Realtytrac, Bloomberg, Wall Street
analysts and Bernanke projected
waves of foreclosures starting in 2012
but it never happened:
1. Short sales
2. Selling non-performing loans

19. Short Sales Completed, REO
Inventories & Primary Market
Delinquent Notes
50,000.00
1,050,000.00
2,050,000.00
3,050,000.00
4,050,000.00
5,050,000.00
2008 2009 2010 2012 2014
NPL
REO
Short Sales
Source: Compiled information from Lawler, Calculated Risk, Realtytrac,
Corelogic, Black Knight Financial Services

20. MAJOR SHIFT FROM REO
TO SELLING NOTES

21. What it Takes to Buy Notes
0
2
4
6
8
10
12
Knowledge
Minimum
Standard
Leveraging Colonial’s Resources is KEY!
Interest Time

22. Two Types of
Discounted Notes
Non-
Performing
Notes
Performing
Notes
Seller Financed
Re-performing
Non-Performing

23. What Determines Note’s Value?
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Performing Notes
Re-Performing Note Cost 70% plus
Defaulted Note Cost 20%-50%
Non-Performing Notes

24. Paths to
Property

25. This house represents all the
houses in the United States that
are on the REO housing market.
APPROXIMATELY 400,000
For every REO, there
are 25 notes in
some stage of
default behind the
scenes.
REO’s vs. Notes

26. REO's vs. NOTES
400,000 REOs
9 Million
Delinquent
Real Estate
Notes
Inventory of Opportunity

27. Buyer
Defaulted Note?
Modify Loan
Deed In Lieu
Foreclose

28. Non-Performing Notes
Modify Deed in Lieu Foreclosure
40% 40% 20%
©NoteSchool 2013

29. Non-Performing Notes
REO Property
Modify Deed in
Lieu
Foreclosure
Re-Performing
Note
Owner Finance or Cash or Rental

30. Non-Performing Note Case
Study

31. Case Study
Property:
Stone Mountain,
GA
Current Market Value:
$100,000
FTC DISCLAIMER: While these case studies are REAL DEALS that my students have
closed recently, these results are NOT typical. As with all courses, you should not
expect to make this much money or any money with “how-to” advice.

32. Non-Performing Notes
REO Property
Foreclosure
Note or Cash or Rental
Modify Deed in
Lieu

33. Own Note Without Having to Manage
ItLoan Servicer
• Collects Pmts
• Taxes / Insurance
• Borrower Work-out
• Foreclosure Mgt
Note Owner
Work done by
Who??

34. • 4/2, 1,800 sf
• Rent $1,250/mo
“I didn’t need a calculator to pull the
trigger on this one!”
Total Cost approx $30,000
Property worth
$100,000…with creative
financing

36. BUYERS BUY HOUSE

37. SIGN NOTE & MAKES
PAYMENTS

38. PAYMENTS TO THE BANK

39. BUYER PAYS OFF
MORTGAGE

40. If
Not
paid
PAYMENT DEFAULT

41. If
Not
paid
PAYMENT DEFAULT

42. BANK BUNDLES BAD
MORTGAGES

43. Mortgage Information
HEDGE FUNDS CREATE
TAPES

44. Mortgage Information
TAPES SENT TO INVESTORS

45. Agreed Upon Price
INVESTOR DUE DILIGENCE

46. SIGN CONTRACT WITH HEDGE
FUND

47. New note
owner
HEDGE FUNDS CREATE
TAPES

48. New note
owner
MODIFICATION = CASH FLOW

49. New note
owner
4 EXIT & PROFIT
STRATEGIES

50. REAL ESTATE

51. EstablishAs-ISValue
Investment to Value Ratio = 50%
Investment to Value Ratio = 20%

52. REONon-Performing
Loans 80%-90% of
Value
30%-50% of
Value
Where do
you make
More Money
with Less
Risk?

53. Buyer
Mortgage
NOTE
Mortgage Lender
Mortgage
NOTE
Mortgage
NOTE
Mortgage
NOTE
Colonial
Mortgage
NOTE

54. Colonial
Mortgage
NOTE
Passive Investor
Active Investor
Hold In-House
STOCK MARKET
X
Mortgage
NOTE
One Note
Many Notes

55. More than just income today…
Tax Free Income For Life
Performing
Notes
Non-Performing
Notes
Formula for zero taxes in retirement:
Notes + Roth IRA/401K = Tax Free Income for Life

56. EstablishAs-ISValue
Price Note
Cost of Note
What % ?
Investment to
Value Ratio

57. What Determines Note’s Value?
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Good Payment Record
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Bad Payment Record
Re-Performing Note Cost 70% plus
Defaulted Note Cost 20% - 50%
Performing Notes
Non-Performing Notes

58. EstablishAs-ISValue
Price Note
Cost of Note
What % ?
Investment to
Value Ratio

59. What it Takes to Buy
0
2
4
6
8
10
12
Minimum
Standard
Knowledge Interest Time

60. Performing
Notes
Owning Notes
Re-Performing
Notes
Seller Financed
Notes

61. Performing Note Case Study
Individual
Notes
PERFORMING NOTE
CASE STUDY

62. Case Study
Owner Occupied
FTC DISCLAIMER: While these case studies are REAL DEALS that my
students have closed recently, these results are NOT typical. As with all
courses, you should not expect to make this much money or any money with
“how-to” advice.
Property:
Hallowell, KS
Current Market Value:
$56,000

63. $34,616
158
Monthly Payments
Mortgage Note
at 9% interest
Monthly Payments of:
$374.69
You Pay
$31,233
For This Note

64. Mortgage Note
$34,616.49
At 9% Interest
Pmt / $375
158 Mos Remain
JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV
$59,250
158
Times!
11% Return
You Pay
$31,233

65. Value$56,000
Cost of Note
Invest - $31,233
62% of Value
Investment to Value ratio

66. Own Note Without Having to Manage It
Loan Servicer
• Collects Pmts
•Taxes / Insurance
• Licensed & Compliant
• Borrower Work-out
Work done
by Who??
271 Months

67. Term of Note
Loan Servicer
Monthly Pmts
Note Owner
one time fee = $150
*Industry average is around $25
JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV
Payment minus
Servicing fee*

69. Cash Flow with Real Estate
Notes
Mortgage
NOTE
YOU
Mortgage
NOTE
Mortgage
NOTE
Mortgage
NOTE
Mortgage
NOTE
Mortgage
NOTE
Mortgage
NOTE
10 notes x $600/ea = $6,000/month

70. How to Retire Tax Free Forever
TAX FREE!
AFTER
TAX

71. $110,000Sale
Terms of Sale
$110K Sales Price - $10K Down Pmt - $100K Seller 1st Lien

72. $100,000
360
Monthly Payments
Mortgage Note
at 10% interest
Monthly Payments of:
$878
You Pay
$70,000
For This Note

73. Mortgage Note
$100,000
@ 10% Interest
Pmt / $878
360 Mos Remain
JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV
$316,080
360
Times!
14.8% Return
You Pay
$70,000

74. 100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044360 pmts
TIMELINE
Invested with Self Directed IRA = $70,000

75. $70,000
360
Monthly Payments
Hard Money Loan
Monthly Payments of:
$878
What is the
interest rate
for this Note?
14.8%

76. Pmt / $878 30 year term
Terms of Loan
Jan 2014 Dec 2044360 pmts
TIMELINE
$70,000

77. Partials are Like Pizza Pies
$6

78. Partials are Like Pizza Pies
$2
$2 $2

79. 360 pmts
Note Term Bought or Sold

80. 100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044
360 pmts
Roth Buys Entire Note for $70,000
$30,000
Note bought at discount

81. 360 pmts
Negotiate to Buy Entire Note $70,000
1st half 2nd half

82. 100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044360 pmts
TIMELINERoth Sells Front End
to Investor
Own Back-end
in Roth Acct
Roth Buys Entire Term

83. 100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044
$69,900
11 yrs 19 yrs
$100
30 Years
$70,000

84. TIMELINE
100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044360 pmts
Roth Sells Front End
to Investor
Own Back-end
in Roth AcctRoth Buys Entire
Term

85. Sell Partial & Own Back-End of Note
$69,900
132 Pmts
Sold to
Investor
TIMELINE
$100 in Roth Acct
You Keep
Remaining 228
Pmts
100,000 @ 10% Pmt / $878 30 year term
10% Return HUGE Return

86. THE NEXT STEP
Buy Notes, Be The Bank

89. You’ll learn how to . . .
• How to get Note Sellers
• Work-out Strategies
• Government Funds Avaialble
• Property analysis & determining the value
• Different types of Defaulted Notes
• Lien positions and title reports

90. On-Demand Training Course
14 Modules (3 days worth of training)
Learn easily At your
own pace

91. Case Studies of Authentic Deals

92. You’ll learn how to . . .
• Marketing To Attract More Clients
• Create Alternative Cash Flows
• Negotiations To Close More Deals
• Steer Clear of Legal Issues
• Math To Pocket More Profits
• How Partials Work
• Much More

93. On-Demand Training Course
Learn easily at
your own pace
12 Modules (3 days worth of training)

94. Each class has 12 + Events Annually
• Arlington, TX: Oct 3rd – 5th
• Charlotte, NC: Nov 14th – 16th
• Atlanta, GA: Dec 12th – 14th
• Ft Lauderdale, FL: Oct 10th –
12th
• Irving, TX: Nov 21st – 23rd
• Los Angeles, CA: Dec 5th – 7th

95. Either Class: $797

96. Gold in Notes
One-Day Workshop
Saturday Oct 11th
Time: 9am – 4pm
• Members:
– FREE . . . Must call Robyn
– spouse $ …
• Non-Members:
– $49 early bird
– $79
Presented by: Joe Varnadore

97. Financial Deal Architect
• Case Studies (from actual deals)
• Building Cash Flows
• Sourcing Capital
• Creative Finance

98. Your IRA Buying Performing
Notes
• Building retirement acct as your own mini-bank
• Phenomenal leveraging techniques with notes